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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
LOUIS DREYFUS NATURAL GAS CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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LOUIS DREYFUS NATURAL GAS CORP.
14000 Quail Springs Parkway
Suite 600
Oklahoma City, Oklahoma 73134
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2000
TO THE SHAREHOLDERS OF LOUIS DREYFUS NATURAL GAS CORP.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Louis Dreyfus Natural Gas Corp., an Oklahoma corporation (the "Company"), will
be held on Tuesday, May 16, 2000 at 9:00 a.m. at the Company's principal
corporate office, 14000 Quail Springs Parkway, Suite 600, Oklahoma City,
Oklahoma, for the following purposes:
1. To elect twelve directors for the ensuing year and until their
successors are duly elected and qualified.
2. To approve the Company's 2000 Employee Stock Purchase Plan.
3. To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 2000.
4. To transact such other business as may come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The meeting may be adjourned from time to
time and, at any reconvened meeting, action with respect to the matters
specified in this Notice may be taken without further notice to the
shareholders, unless required by applicable law or the Bylaws of the Company.
Only shareholders of record at the close of business on April 3, 2000
are entitled to notice of, and to vote at, the meeting. A list of such
shareholders will be available at the meeting and at the Company's principal
corporate office, 14000 Quail Springs Parkway, Suite 600, Oklahoma City,
Oklahoma 73134 for ten days before the meeting. All shareholders are cordially
invited to attend the meeting in person. Whether or not you expect to attend the
meeting, please complete, date, sign and return the enclosed proxy as promptly
as possible in order to ensure your representation at the meeting. A return
envelope (which is postage prepaid if mailed in the United States) is enclosed
for that purpose. Even if you have given your proxy, you may still vote in
person if you attend the meeting. Please note, however, that if your shares are
held of record by a broker, bank or other nominee and you wish to vote at the
meeting, you must bring to the meeting a proxy issued in your name by the record
holder.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin R. White, Secretary
Oklahoma City, Oklahoma
April 11, 2000
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LOUIS DREYFUS NATURAL GAS CORP.
14000 Quail Springs Parkway
Suite 600
Oklahoma City, Oklahoma 73134
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 16, 2000
The following information is furnished in connection with the Annual
Meeting of Shareholders (the "Annual Meeting") of Louis Dreyfus Natural Gas
Corp., an Oklahoma corporation (the "Company"), to be held on Tuesday, May 16,
2000 at 9:00 a.m. at the Company's principal corporate office, 14000 Quail
Springs Parkway, Suite 600, Oklahoma City, Oklahoma. This Proxy Statement will
be mailed on or about April 15, 2000 to holders of record of Common Stock as of
the record date.
The record date and time for determining shareholders entitled to vote
at the Annual Meeting have been fixed at the close of business on April 3, 2000.
On that date, the Company had outstanding 40,524,225 shares of Common Stock.
Each outstanding share of Common Stock is entitled to one vote.
The enclosed proxy for the Annual Meeting is being solicited by the
Company's Board of Directors. The Company will bear the entire cost of such
solicitation of proxies, including preparation, assembly, printing and mailing
of this proxy statement, the proxy and any additional information furnished to
shareholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial owners.
The Company may reimburse persons representing beneficial owners of Common Stock
for their costs of forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers or other regular
employees of the Company. No additional compensation will be paid to directors,
officers or other regular employees for such services.
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal corporate office, 14000
Quail Springs Parkway, Suite 600, Oklahoma City, Oklahoma 73134, a written
notice of revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not, by itself, revoke a proxy.
Shares represented by valid proxies will be voted, unless otherwise
directed in the proxy, FOR the election of the director nominees, FOR the
approval of the 2000 Employee Stock Purchase Plan and FOR the ratification of
the selection of Ernst & Young LLP as independent auditors of the
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Company for the year ending December 31, 2000. As to any other business which
may properly come before the Annual Meeting, shares represented by proxies will
be voted in accordance with the recommendations of the Board of Directors,
although the Company does not presently know of any other such business.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company has established the size of the
Board of Directors as twelve members and has nominated the current twelve
members of the Board for re-election. Each nominee, if elected, will hold office
until the next annual meeting of shareholders and until his or her successor is
duly elected and qualified, or until his or her earlier death, resignation or
removal. Each nominee has agreed to serve if elected, and the Company has no
reason to believe that any nominee will be unable to serve. Should any of the
nominees named below cease to be a nominee at or prior to the Annual Meeting,
the shares represented by the enclosed proxy will be voted in favor of the
remainder of the nominees named below and for such substitute nominees, if any,
as may be designated by the Board of Directors and nominated by either of the
proxies named in the enclosed proxy. Proxies cannot be voted for a greater
number of nominees than the number of nominees named herein.
Nominees
The nominees for the position of director of the Company are as
follows:
Name Age Principal Occupation
---- --- --------------------
Mark E. Andrews, III 49 Private Investor
E. William Barnett 67 Senior Counsel of Baker & Botts, L.L.P.
Richard E. Bross 51 Executive Vice President - Land and
Operations of the Company
Daniel R. Finn, Jr. 56 Executive Vice President and Chairman
of the Energy Group of Louis Dreyfus
Corporation
Peter G. Gerry 54 Managing Director of Sycamore Management
Corporation
Gerard Louis-Dreyfus 67 Chairman,President and Chief Executive
Officer of S.A. Louis Dreyfus et Cie
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Mark E. Monroe 45 President and Chief Executive Officer of the
Company
John H. Moore 74 Petroleum Consultant
James R. Paul 65 Retired, Former President and Chief
Executive Officer of The Coastal Corporation
Nancy K. Quinn 46 Managing Director of Hanover Capital, LLC
Simon B. Rich, Jr. 55 Vice Chairman, President and Chief Executive
Officer of Louis Dreyfus Holding Company Inc.
Ernest F. Steiner 58 Executive Vice President and Chief
Financial Officer of Louis Dreyfus Holding
Company Inc.
The following is a brief description of the business background of each
of the nominees:
Mark E. Andrews, III was first elected as a director of the Company in
October 1997 following the Company's acquisition of American Exploration Company
and has served as Vice Chairman of the Board since such time. Mr. Andrews is a
private investor and previously served as Chairman of the Board and Chief
Executive Officer of American Exploration Company from 1983 until its
acquisition by the Company. He is also a director of IVAX Corporation. Mr.
Andrews holds a B.A. from Harvard College and an M.B.A. from Harvard Business
School.
E. William Barnett was elected to the Board in 1998. Mr. Barnett joined
Baker & Botts, L.L.P. in 1958 and is currently Senior Counsel and was the
Managing Partner from 1984-1998. His primary areas of practice have been
commercial litigation and antitrust law. Mr. Barnett serves as Chairman of the
Board of Trustees of Rice University, is a director of Chase Bank of Texas and a
director or trustee of numerous other civic and professional organizations. He
received his B.A. from Rice University and his LL.B. from the University of
Texas School of Law.
Richard E. Bross is Executive Vice President - Land and Operations of
the Company and was first elected as a director of the Company in September
1993. Mr. Bross joined the Company in 1991 and served as its President until
September 1993. Prior to joining the Company, Mr. Bross served in various
capacities at Argent Energy, Inc. (previously named Woods Petroleum Corporation)
from 1977 until 1991, culminating with his appointment as Executive Vice
President and Chief Operating Officer in September 1990. Mr. Bross joined Argent
Energy, Inc. in 1977 after working for Gulf Oil Corporation for seven years in
various engineering functions. Mr. Bross holds a B.S. from the University of
Missouri and an M.B.A. from Oklahoma City University.
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Daniel R. Finn, Jr. has been a director of the Company since 1990. Mr.
Finn is Executive Vice President and Chairman of the Energy Group of Louis
Dreyfus Corporation, an indirect subsidiary of S.A. Louis Dreyfus et Cie. Mr.
Finn has been employed by S.A. Louis Dreyfus et Cie or its subsidiaries since
1972, serving in various capacities including Chairman of Louis Dreyfus Energy
Corp., a former indirect subsidiary of S.A. Louis Dreyfus et Cie which was
engaged in natural gas trading and crude oil and petroleum product trading and
marketing, Chief Executive Officer of Duke/Louis Dreyfus LLC, Vice President of
worldwide wheat merchandising and Senior Vice President of worldwide grain
merchandising. In addition, Mr. Finn is a director of Louis Dreyfus Corporation
and Louis Dreyfus Holding Company Inc., a subsidiary of S.A. Louis Dreyfus et
Cie. Mr. Finn holds a B.A. from Fairfield University and an M.B.A. from
Northwestern University.
Peter G. Gerry was first elected as a director of the Company in
October 1997 following the Company's acquisition of American Exploration
Company. Mr. Gerry, a former director of American Exploration Company, is
Managing Director of Sycamore Management Corporation, an investment management
firm, and is a former President of Citicorp Venture Capital Ltd. and director of
Pond Hill Homes, Ltd. Mr. Gerry holds a B.A. from Harvard College and an M.B.A.
from Harvard Business School.
Gerard Louis-Dreyfus has been a director of the Company since September
1993. Mr. Louis-Dreyfus is the Chairman, President and Chief Executive Officer
of S.A. Louis Dreyfus et Cie, the parent company of the Louis Dreyfus worldwide
organization of companies. S.A. Louis Dreyfus et Cie is privately owned by
family members and has been in business for almost 150 years. The activities of
the Louis Dreyfus group include worldwide trading and merchandising of various
agricultural and energy commodities, crushing and refining, citrus processing,
ownership and management of ocean vessels, real estate ownership, development
and management, forestry management and particleboard manufacturing and
petroleum refining and marketing. Mr. Louis-Dreyfus is the great-grandson of the
founder. Mr. Louis-Dreyfus is a graduate of Duke University and Duke University
School of Law. Upon graduation he joined the firm of Dewey Ballantine, New York,
until 1965 when he joined S.A. Louis Dreyfus et Cie.
Mark E. Monroe is President and Chief Executive Officer of the Company
and has been a director of the Company since 1986. Mr. Monroe joined the Company
in 1980, which was then known as Bogert Oil Company and which was later acquired
by S.A. Louis Dreyfus et Cie, and served as Vice President and Chief Financial
Officer of the Company until April 1991. From April 1991 until September 1993,
Mr. Monroe served as a Vice President of Louis Dreyfus Energy Corp., a former
indirect subsidiary of S.A. Louis Dreyfus et Cie which was engaged in oil and
natural gas trading and marketing. Mr. Monroe rejoined the Company in September
1993 and served as Chief Operating Officer until his election to his present
position in August 1996. Mr. Monroe holds a B.B.A. from the University of Texas
and is a Certified Public Accountant.
John H. Moore was first elected as a director of the Company in October
1997 following the Company's acquisition of American Exploration Company. Mr.
Moore, a former director of American Exploration Company, is a petroleum
consultant and was Chairman of the Board and
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Chief Executive Officer of Ladd Petroleum Corporation from 1986 to 1988. He is
also a former director of First Interstate Bank of Denver and a former director
of General Atlantic Resources. Mr. Moore holds B.S. and M.E. degrees from the
University of Oklahoma.
James R. Paul was first elected as a director of the Company in 1994.
Mr. Paul is Chairman of a private investment company and retired in January 1994
from The Coastal Corporation after twenty years of service in various executive
capacities, including President and Chief Executive Officer from 1989, and a
director from 1981, until his retirement. He is also a director of Transcanada
Pipelines, Ltd. Mr. Paul holds a B.S. from Wichita State University.
Nancy K. Quinn was first elected as a director of the Company in 1999.
Ms. Quinn is a Managing Director of Hanover Capital, LLC, a privately held
financial advisory and consulting firm. From 1996 through January 2000, she was
a Limited Partner of The Beacon Group, LP, a private investment and advisory
partnership. Prior to 1996, Ms. Quinn was a Managing Director and Co-Head of the
Energy and Natural Resources Group at Paine Webber Inc. and Kidder Peabody & Co.
Inc. Ms. Quinn holds a B.F.A. from Louisiana State University and an M.B.A. from
the University of Arkansas.
Simon B. Rich, Jr. has been a director of the Company since 1990 and
has served as Chairman of the Board of Directors since August 1996. Mr. Rich is
Vice Chairman, President and Chief Executive Officer of Louis Dreyfus Holding
Company Inc., a subsidiary of S. A. Louis Dreyfus et Cie. From October 1996
until June 1997, Mr. Rich served as Managing Director and Chief Operating
Officer of Duke/Louis Dreyfus LLC. From September 1993 until August 1996, Mr.
Rich served as President and Chief Executive Officer of the Company. From 1990
to 1993, Mr. Rich served as Executive Vice President of Louis Dreyfus Energy
Corp. From 1986 to 1990, Mr. Rich served as Executive Vice President-Development
and Strategic Planning of S.A. Louis Dreyfus et Cie. Mr. Rich holds a B.A. from
Duke University.
Ernest F. Steiner has been a director of the Company since October
1997. Mr. Steiner is a director of S.A. Louis Dreyfus et Cie and the Chief
Financial Officer of the Louis Dreyfus group. He is also Executive Vice
President of Louis Dreyfus Holding Company Inc. and Louis Dreyfus Corporation,
subsidiaries of S.A. Louis Dreyfus et Cie, and has been employed by Louis
Dreyfus Corporation or other subsidiaries of S.A. Louis Dreyfus et Cie since
1972. Mr. Steiner is also a director of Louis Dreyfus Citrus S.A. Mr. Steiner
holds a B.S. from Cornell University.
The Board of Directors recommends that the shareholders vote "For" the
named nominees.
Board Committees and Meetings
The Board of Directors has an Executive Committee, a Compensation
Committee and an Audit Committee.
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The Executive Committee may exercise all of the powers of the Board of
Directors, except to the extent limited by resolution of the Board of Directors,
the Company's Bylaws and by applicable law. The Executive Committee, which
during 1999 consisted of Messrs. Andrews, Louis-Dreyfus, Rich, Monroe and Finn,
did not hold any meetings but acted by unanimous consent without a meeting four
times during 1999.
The Compensation Committee establishes general compensation policies,
reviews and makes specific recommendations to the Board of Directors concerning
salaries and incentive compensation for executive officers of the Company and
administers the Company's Stock Option Plan. The Compensation Committee, which
during 1999 consisted of Messrs. Barnett, Moore and Paul, met twice and acted by
unanimous consent without a meeting three times during 1999.
The Audit Committee examines the Company's accounting processes and
financial reporting systems, reviews with management and the independent
auditors the adequacy of the Company's internal financial and accounting
controls, reviews the Company's financial disclosures, evaluates the performance
of the independent auditors and reviews the Company's auditing, accounting and
financial reporting processes generally. The Audit Committee has adopted and
operates under a charter. The Audit Committee, which during 1999 consisted of
Messrs. Gerry, Moore and Paul, met five times during 1999.
The Board of Directors does not have a nominating committee. The entire
Board performs this function and evaluates and recommends nominees for election
to the Board of Directors. Although there is no formal procedure for
shareholders to recommend nominees for the Board of Directors, the Board will
consider such recommendations if submitted in writing addressed to the Secretary
of the Company.
During the year ended December 31, 1999, the Board of Directors held
five meetings and acted by unanimous consent without a meeting once. During
1999, all incumbent directors of the Company attended at least 75% of the
aggregate of all meetings of the Board of Directors and committees on which they
served, except Messrs. Finn, Louis-Dreyfus and Steiner, who attended 60% of all
such meetings and Mr. Gerry who attended 70% of all such meetings.
Compensation of Directors
Each non-employee director, other than the Chairman and Gerard
Louis-Dreyfus, receives an annual retainer of $20,000 and a fee of $1,000 for
each meeting of the Board of Directors or committee thereof attended and is
reimbursed for certain expenses in connection with attendance at such meetings.
The chairmen of committees of the Board receive an additional annual fee of
$3,000. The Chairman of the Board of Directors receives an annual retainer of
$56,250, but does not receive additional fees for meetings attended. Under the
Company's Stock Option Plan approved by the shareholders, each non-employee
director receives, while serving as a director, option grants to purchase 2,000
shares of Common Stock as of the date of each annual meeting of shareholders.
Any new non-employee director will receive under the Company's Stock Option Plan
an initial option grant to purchase 6,000 shares of Common Stock upon election
to the Board of Directors and, while
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serving as a director, will receive additional option grants to purchase 2,000
shares of Common Stock as of the date of each subsequent annual meeting of
shareholders.
Under the Company's Non-Employee Director Deferred Stock Compensation
Program (the "Deferred Stock Program"), each non-employee director received
during 1999 a deferred stock award of 1,000 shares of Common Stock and, while
serving as a director, will receive deferred stock awards of 1,000 shares of
Common Stock following each annual meeting of shareholders. Any new non-employee
director will receive under the Deferred Stock Program a deferred stock award of
1,000 shares of Common Stock upon election to the Board of Directors and, while
serving as a director, will receive deferred stock awards of 1,000 shares of
Common Stock following each annual meeting of shareholders commencing with the
annual meeting held in the calendar year following the date of the initial
deferred stock award received by the new non-employee director under the
Deferred Stock Program. Under the Deferred Stock Program, non-employee directors
may also make an annual irrevocable election to receive all or a portion of the
annual cash fees that the non-employee director would otherwise be entitled to
receive from the Company in the form of deferred stock. The shares issued under
the Deferred Stock Program are held by the Louis Dreyfus Natural Gas Corp.
Non-Employee Director Deferred Stock Compensation Award Trust (the "Trust") and
will be delivered to the applicable non-employee directors after termination of
service as a director of the Company, upon a Change in Control (as defined in
the Trust Agreement) of the Company or at such other times as the Company
determines. The non-employee directors have the right to direct the voting of
their respective deferred shares held in the Trust.
PROPOSAL TWO
APPROVAL OF LOUIS DREYFUS NATURAL GAS CORP.
2000 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors adopted the Louis Dreyfus Natural Gas Corp. 2000
Employee Stock Purchase Plan (the "Plan") in February of 2000 and directed that
the Plan be submitted for approval by the shareholders at the 2000 Annual
Meeting. The Plan provides eligible employees with the opportunity to purchase
shares of the Company's Common Stock through payroll deductions at a discount
from the market value of the shares and on a tax-favorable basis. The Plan is
intended to encourage stock ownership by employees in order to increase their
proprietary interest in the growth and financial success of the Company.
The Plan will be administered by the Board of Directors, and the Board
may delegate administrative authority to others to the extent permitted by
applicable laws, rules and regulations. The Board or its designees will have
full authority to interpret and apply the terms of the Plan.
The maximum number of shares of Common Stock authorized for purchase
under the Plan is 500,000 shares, subject to adjustment in connection with stock
splits, reverse stock splits, stock dividends, combinations or reclassifications
of the Common Stock, or any other increase or decrease in the number of shares
of Common Stock effected without receipt of consideration by the Company.
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The shares sold under the Plan may be authorized but previously unissued shares,
treasury shares, shares acquired by the Company from time to time in the open
market, or any combination thereof.
All employees of the Company, and such of its subsidiaries as are
designated by the Board of Directors, whose customary employment is more than 20
hours per week and 5 months in a calendar year are eligible to participate in
the Plan. Eligible employees include officers of the Company and members of the
Board of Directors who are also employees. Any employee who owns or acquires
five percent (5%) or more of the Company's Common Stock may not participate in
the Plan.
Under the Plan, eligible employees may purchase, through regular
payroll deductions, shares of Common Stock at a purchase price equal to the
lesser of (i) eighty-five percent (85%) of the closing sales price of a share of
Common Stock on the last day of an offering period or (ii) eighty-five percent
(85%) of the greater of (a) the closing sales price of a share of Common Stock
on the first day of an offering period or (b) the average of the closing sales
prices during an offering period.
The Plan initially provides for four three-month offering periods in
each year commencing on the first trading day on or after March 1, June 1,
September 1 and December 1 of each year; provided that the first offering period
under the Plan will not commence until such time as is determined by the Company
after the shareholders have approved the Plan and the Securities and Exchange
Commission declares effective the Company's Registration Statement to be filed
in connection with the Plan. The Board of Directors or its designees may modify
the offering period commencement dates and the duration of offering periods.
An eligible employee may contribute by payroll deduction up to a
maximum of fifteen percent (15%) of the employee's base compensation received
during the offering period for purchase of shares pursuant to the Plan. Payroll
deductions during an offering period are accumulated to be used to purchase
shares of Common Stock at the end of the offering period. A participant may
generally increase, decrease, or suspend payroll deductions during an offering
period or withdraw from participation in the Plan at any time. The Board or its
designees may limit the number of participation rate changes during any offering
period. If a participant's employment terminates for any reason before the end
of an offering period, his or her participation in the Plan ceases immediately,
and any accumulated contributions are paid to such participant. No participant
may purchase under the Plan more than $25,000 of Common Stock in any calendar
year, measured by its undiscounted value at the beginning of each offering
period.
The Plan is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code (the "Code"), and
participants will be afforded favorable tax treatment under Sections 421 and 423
of the Code. A participant in the Plan will not recognize income subject to
Federal income tax at the commencement of an offering period or at the time
shares are purchased. However, any discount from the market price on the
purchase date may be subject to employment taxes (FICA and FUTA). No Federal
income tax consequences result to the Company at the commencement of an offering
period under the Plan, upon the subsequent purchases of Common Stock by
participants, or upon the disposition of shares acquired under the Plan other
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than with respect to a disqualifying disposition. If no disposition of the
shares purchased in an offering period is made within two years from the
commencement of such offering period nor within one year from the date the
shares are transferred to the participant, then upon subsequent disposition of
the shares, ordinary income will be recognized by the participant in an amount
equal to the lesser of (i) fifteen percent (15%) of the fair market value of the
shares on the commencement date of the applicable offering period or (ii) the
amount by which the fair market value at the time of sale exceeds the price paid
by the participant. Any additional gain recognized will be capital gain. Any
loss recognized by a participant upon disposition of the shares will be capital
loss.
If the shares are disposed of within either the two-year or one-year
periods mentioned above (a so-called disqualifying disposition), the participant
will recognize ordinary income at the time of such disposition equal to the
amount, if any, by which the fair market value of the shares at the time such
shares were purchased exceeds the purchase price of the shares, and the Company
will generally be entitled to a corresponding deduction from its income. Any
difference between such fair market value and the disposition price will be
treated as capital gain or loss to the participant and will not be deductible by
the Company.
The Plan will become effective upon approval by the shareholders of the
Company and will continue in effect for a term of ten years, unless earlier
terminated in accordance with the provisions of the Plan. The Board of Directors
of the Company may amend, alter or terminate the Plan at any time. Shareholder
approval of amendments or alterations of the Plan will be required only to the
extent necessary to comply with Section 423 of the Code or other applicable law,
regulation or stock exchange rule.
As of April 1, 2000, a total of approximately 385 employees of the
Company, including officers of the Company, are eligible to participate in the
Plan. However, it is not possible to determine how many employees will elect to
participate, the amount that participating employees will elect to contribute,
or the number of shares which may be purchased and price thereof under the Plan.
The Board of Directors recommends that the shareholders vote for "FOR"
the approval of the 2000 Employee Stock Purchase Plan.
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PROPOSAL THREE
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2000 and has further
directed that management submit the selection of the independent auditors for
ratification by the shareholders at the Annual Meeting. Ernst & Young LLP has
audited the Company's consolidated financial statements since 1992.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
Shareholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. If the shareholders fail to ratify the selection, the Board will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the Board determines
that such a change would be in the best interests of the Company and its
shareholders.
The Board of Directors recommends that the shareholders vote "FOR"
ratification of the selection of Ernst & Young LLP as independent auditors of
the Company for the year ending December 31, 2000.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
The executive officers of the Company are as follows:
Name Age Position
---- --- --------
Mark E. Monroe 45 President and Chief Executive Officer
Jeffrey A. Bonney 43 Executive Vice President and Chief
Financial Officer
Richard E. Bross 51 Executive Vice President - Land and
Operations
Ronnie K. Irani 43 Executive Vice President - Engineering
and Exploration
Kevin R. White 42 Executive Vice President - Corporate
Development and Strategic Planning
and Secretary
The executive officers of the Company are elected by the Board of
Directors and serve at its discretion. The following is a brief description of
the business background of each of the executive officers who are not also
directors of the Company. For descriptions of the business background of Mark E.
Monroe and Richard E. Bross, each a director of the Company, see "Election of
Directors - Nominees."
Jeffrey A. Bonney is Executive Vice President and Chief Financial
Officer of the Company. Mr. Bonney joined the Company in November 1993. From
April 1990 to November 1993, Mr. Bonney was the Vice President and Controller of
Hadson Energy Resources Corporation, an international oil and gas concern. Prior
thereto, Mr. Bonney held various management positions with other independent oil
and gas companies. He began his career as an auditor with Deloitte, Haskins &
Sells in 1978. Mr. Bonney is a Certified Public Accountant and holds a B.S. from
Oklahoma Christian University.
Ronnie K. Irani is Executive Vice President - Engineering and
Exploration of the Company. He joined the Company in March 1991 from Argent
Energy, Inc. (previously named Woods Petroleum Corporation) where he had worked
for the previous 12 years. At Argent Energy, Inc., Mr. Irani held the title of
Manager of Reservoir Engineering. Mr. Irani holds a B.S. from Bombay University,
India, a B.S. and M.S. from the University of Oklahoma and an M.B.A. from
Oklahoma City University.
11
<PAGE>
Kevin R. White is Executive Vice President - Corporate Development and
Strategic Planning and Secretary of the Company. Mr. White joined the Company in
1983, which was then known as Bogert Oil Company, and served in various
management capacities prior to appointment to his present position. From 1981
until 1982, Mr. White was employed as an auditor with Arthur Andersen & Co. and
Ernst & Young. Mr. White is a Certified Public Accountant and holds B.S. and
M.S. degrees from Oklahoma State University.
Executive Compensation
The following table sets forth information with respect to compensation
received by the chief executive officer of the Company and the four other mostly
highly compensated executive officers of the Company for 1999. Such individuals
are hereinafter referred to as the "named executive officers."
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Restricted Securities All Other
Stock Underlying Compen-
Name and Principal Position Year Salary Bonus Awards($)(1) Options(#) sation(2)
--------------------------- ---- ------ ----- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mark E. Monroe 1999 $335,000 $235,000 $115,000 50,000 $ 12,222
President and Chief Executive 1998 335,000 270,000 -- 75,000 12,348
Officer 1997 272,115 300,000 -- 100,000 12,388
Jeffrey A. Bonney 1999 $150,000 75,000 $ 40,000 25,000 $ 12,222
Executive Vice President 1998 150,000 80,000 -- 37,500 12,348
and Chief Financial Officer 1997 114,540 85,000 -- 40,000 12,388
Richard E. Bross 1999 $225,000 90,000 $ 50,000 25,000 $ 12,222
Executive Vice President - 1998 225,000 95,000 -- 44,000 12,348
Land and Operations 1997 178,000 100,000 -- 40,000 12,388
Ronnie K. Irani 1999 $225,000 $130,000 65,000 35,000 $ 12,222
Executive Vice President - 1998 225,000 140,000 -- 50,000 12,348
Engineering and Exploration 1997 174,425 150,000 -- 65,000 12,388
Kevin R. White 1999 $150,000 75,000 $ 40,000 20,000 $ 12,222
Executive Vice President - 1998 150,000 85,000 -- 31,250 12,348
Corporate Development 1997 134,425 90,000 -- 40,000 12,388
and Strategic Planning
</TABLE>
___________________________
(1) The value of restricted stock awards granted to the named executive
officers for 1999 is calculated based on the market price per share of
Common Stock on the date of grant of $22.16. These restricted shares vest
as to 50% of the shares on the first anniversary of the date of grant and
as to the remaining 50% on the second anniversary of the date of grant. The
restricted
12
<PAGE>
shares granted for 1999 are held by the Louis Dreyfus Natural Gas
Corp. Restricted Stock Trust, and other restricted shares received by
the named executive officers during prior periods are held by the Louis
Dreyfus Natural Gas Corp. Deferred Stock Award Trust (collectively, the
"Trusts"). The restricted shares held by the Trusts will be delivered
to the applicable named executive officers after termination of
employment with the Company, subject to applicable vesting
requirements, or upon a Change in Control (as defined in the Trust
Agreements) of the Company. The applicable named executive officers
have the right to direct the voting of the restricted shares held in
the Trusts. If any cash dividends are received with respect to the
shares while held by the Trusts, the dividends will be invested in an
interest bearing account and the dividends and interest will be paid to
the applicable named executive officers when the shares are delivered.
The total number of restricted shares held in the Trusts for the
benefit of each of the named executive officers and the dollar value
thereof, based on the market price of the Common Stock on December 31,
1999 of $18.125 per share, are as follows: Monroe - 25,190 shares
($456,568); Bonney - 1,805 shares ($32,715); Bross - 17,257 shares
($312,783); Irani - 17,934 shares ($325,053); and White - 6,805 shares
($123,340).
(2) All Other Compensation consists of (i) employer contributions to the
Company's 401(k) plan on behalf of each of the named executive officers
to match pre-tax elective deferral contributions (included under
Salary) made by each of the named executive officers to such plan and
(ii) certain employer discretionary profit sharing contributions
allowed by such plan.
The following table contains information concerning the grant of stock
options during the year ended December 31, 1999 under the Company's Stock Option
Plan to the named executive officers.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
------------------------------------------------------------------
% of Total
Options
Granted to
Employees Exercise or
Options in Fiscal Base Price Expiration Grant Date
Name Granted (#)(1) Year ($/Sh)(2) Date Present Value(3)
---- -------------- ---- --------- ---- ----------------
<S> <C> <C> <C> <C> <C>
Mark E. Monroe 50,000 12.4% $ 19.19 11/16/09 $ 571,000
Jeffrey A. Bonney 25,000 6.2% $ 19.19 11/16/09 $ 285,500
Richard E. Bross 25,000 6.2% $ 19.19 11/16/09 $ 285,500
Ronnie K. Irani 35,000 8.7% $ 19.19 11/16/09 $ 399,700
Kevin R. White 20,000 4.9% $ 19.19 11/16/09 $ 228,400
</TABLE>
____________________
(1) All options granted to the named executive officers during 1999 were
granted under the Company's Stock Option Plan. The exercise price of
such options is equal to 100% of the price per share of the Common
Stock on the date of grant. The options become exercisable at the rate
of 25% per year commencing one year after the date of grant so long as
the optionee remains employed by the Company, and will become
immediately exercisable in the event of death of an optionee or in the
event of a Change in Control of the Company (as defined in the Stock
Option Plan) unless the Compensation Committee expressly determines
otherwise. The options expire if not exercised 10 years after the date
of grant.
(2) Exercise price of options must be paid in cash, by tender of shares of
Common Stock (valued at fair market value at the date of exercise), by
surrender of a portion of the option, or by a combination of such means
of payment.
13
<PAGE>
(3) Grant Date Present Value is based on application of the Black-Scholes
option pricing model. The actual value, if any, realized will depend on
the excess of the stock price over the exercise price on the date the
option is exercised. There is no assurance that the value realized will
be at or near the value estimated by the Black-Scholes model. The
estimated values under that model are based on the following
assumptions: (i) annualized price volatility of the Company's Common
Stock of 37% calculated over the period commencing on November 12, 1993
and ending on the option grant date; (ii) a risk-free rate of return
equal to the 10 year United States Treasury Bond rate on the option
grant date of 5.85%; (iii) a dividend yield of 0%; and (iv) exercise of
all options at the expiration date of 10 years from date of grant.
The following table provides information with respect to the named
executive officers concerning the exercise of options during the year ended
December 31, 1999 and unexercised options held as of December 31, 1999.
<TABLE>
<CAPTION>
Option Exercises and Year-end Value Table
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Options at Options at
December 31, 1999 December 31, 1999(1)
----------------- --------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark E. Monroe 32,694 $ 259,160 181,056 171,250 $ 198,989 $ 292,206
Jeffrey A. Bonney 6,108 $ 44,271 64,267 82,125 $ 140,806 $ 155,361
Richard E. Bross - - 117,000 87,000 $ 161,399 $ 179,196
Ronnie K. Irani - - 128,500 116,500 $ 233,338 $ 200,950
Kevin R. White - - 78,813 72,437 $ 163,023 $ 132,508
</TABLE>
____________________________
(1) Value of unexercised in-the-money options at December 31, 1999 is
calculated based on the market price per share of Common Stock of
$18.125 per share on December 31, 1999 less the option exercise price.
Termination of Employment and Change In Control Arrangements
The Company has entered into agreements with the named executive officers
providing for the payment of certain severance benefits upon involuntary
termination of such persons, other than for cause, within two years after a
Change in Control (as defined in such agreements) of the Company, including
constructive termination as a result of certain changes in duties or reduction
of compensation. The agreements are intended to promote the retention of the
named executive officers by providing them with an extra measure of financial
security in the event of a Change in Control of the Company. In the event of
involuntary termination within two years after a Change in Control, the
agreements provide that the named executive officer will receive a lump sum
severance payment equal to two times the named executive officer's annual
compensation. For this purpose, annual compensation is defined as (i) the named
executive officer's annual salary immediately prior to the date on which a
Change in Control occurs plus (ii) the average annual bonus received by the
named executive officer over the three years immediately prior to the Change in
Control or such lesser
14
<PAGE>
period as the named executive officer has been employed by the Company prior to
the Change in Control. The agreements will remain in effect until March 31,
2002, at which time the Company will have the right to determine in its
discretion whether to continue the agreements, terminate the agreements or offer
the named executive officers different agreements. No amounts will be payable by
the Company under the agreements unless a Change in Control occurs and such
Change in Control is followed within two years by the involuntary termination of
the named executive officer.
Shareholder Return Performance
Set forth below is a line graph comparing the percentage change in the
cumulative total shareholder returns on the Company's Common Stock against the
cumulative total shareholder returns of the S&P 500 Index and the Dow Jones Oil
Secondary Index (the "Indices") for the period between December 31, 1994 and
December 31, 1999. The line graph assumes a $100 investment in the Company's
Common Stock and in each of the Indices on December 31, 1994 and that any
dividends were reinvested. The graph is presented in accordance with the
requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C> <C>
LOUIS DREYFUS NATURAL GAS CORP. 100.00 118.63 134.31 146.57 111.76 142.16
S & P 500 100.00 137.58 169.17 225.61 290.09 351.13
DOW JONES OIL, SECONDARY 100.00 115.70 142.57 151.84 110.88 125.34
</TABLE>
15
<PAGE>
Compensation Committee Interlocks and Insider Participation
During 1999, the Compensation Committee of the Board of Directors was
comprised of E. William Barnett, John H. Moore and James R. Paul. Mr. Barnett is
Senior Counsel of the law firm of Baker & Botts, L.L.P. The Company did not
utilize the services of Baker & Botts, L.L.P. during 1999 but has retained such
firm for one matter during 2000.
Compensation Committee Report on Executive Compensation
General. The Compensation Committee of the Board of Directors is primarily
responsible for the development and implementation of the Company's executive
compensation programs. The Committee makes recommendations to the Board of
Directors of the Company with respect to the various executive compensation
plans which have been or may be adopted by the Company, as well as approving the
specific compensation levels of executive officers. The Committee also
administers the Company's Stock Option Plan. The Committee periodically reviews
the Company's results of operations and future plans in conjunction with
meetings of the full Board of Directors. The Committee seeks to ensure that the
Company's executive officer compensation programs support the objectives of the
Company's plans.
In general, in determining levels of base salary, bonus and long-term
equity-based compensation for the Company's Chief Executive Officer and the
other named executive officers, the Committee fosters the Company's goals
through the application of three key criteria: first, through comparability to
compensation levels of equivalent officers in similarly situated companies in
the oil and gas industry; second, through review of the executive's individual
contribution to the Company; and third, through the executive's contribution to
the achievement of specific results, such as increases in revenues, production,
reserves, cash flow and net income. The Committee applies the foregoing criteria
subjectively, including the weight given the respective criteria.
Base Salaries and Cash Bonuses. Base salaries for the Company's executive
officers are based primarily on the level of salaries historically paid to the
Company's executive officers and are designed to be comparable to the general
level of salaries of executive officers in similarly situated companies.
Discretionary annual bonuses are paid based on the Committee's subjective
evaluation of the performance of the Company and of each executive officer in
the context of the criteria described above. Total cash bonuses authorized by
the Committee for the named executive officers for 1999 were $605,000. This
amount is approximately 10% lower than the cash bonuses awarded to the named
executive officers for 1998. The decrease is primarily attributable to increases
in the long-term equity incentive compensation of the named executive officers
for 1999, including grants of restricted stock. The Committee believes that the
salaries and cash bonuses paid during 1999 to executive officers, including the
Chief Executive Officer, are reasonable when compared to the Company's increases
in revenues, production, reserves and cash flow in 1999 compared to 1998.
Long-Term Equity Incentive Compensation. The Company's Stock Option Plan is
administered by the Compensation Committee and is designed to provide long-term
equity-based compensation to executive officers, vice presidents, managers and
other key employees. The Committee noted that, pursuant to information compiled
in previous studies by compensation consultants, the option holdings of the
Company's executive officers are generally less than those
16
<PAGE>
of similar executives at comparable companies, and the Committee approved during
1999 the grant to the named executive officers of options to purchase a total of
155,000 shares of Common Stock under the Company's Stock Option Plan. The
Committee also approved grants of a total of 13,991 shares of restricted Common
Stock to the named executive officers for 1999. The total dollar value of these
restricted shares based on the market price of the Common Stock on the date of
grant was $310,000. The respective number of options and dollar value of
restricted shares received by each of the named executive officers for 1999 is
set forth under "Executive Compensation and Other Information -- Executive
Compensation." The number of options and restricted shares granted to the Chief
Executive Officer and each of the other named executive officers was established
based on the Committee's subjective judgment, but reflects the Committee's
favorable evaluation of the performance of the Company and the named executive
officers during 1999 and the Committee's desire to provide competitive long-term
equity incentive awards to these members of senior management at a level that
compares favorably with the long-term equity incentive compensation practices of
the Company's competitors.
Compensation of the Chief Executive Officer. With respect to 1999, Mark E.
Monroe, President and Chief Executive Officer of the Company, was awarded a
bonus of $235,000. Mr. Monroe also was awarded options to purchase 50,000 shares
of Common Stock under the Company's Stock Option Plan and 5,190 shares of
restricted stock. The bonus, option and restricted stock awards reflected the
Committee's evaluation of Mr. Monroe's leadership of the Company. During 1999,
the Company (i) completed a successful drilling program investing $144 million
and drilling 229 wells with 92% completed as producers and a finding cost of
$.71 Mcfe, (ii) recorded improvements in expense categories by showing decrease
in both per unit and absolute amounts, (iii) reported record cash flows,
EBITDAX, production and year-end proved reserves, and (iv) successfully
negotiated a $44 million long-term contract termination payment.
Section 162(m). The Committee has not adopted a policy with respect to
qualification of executive compensation in excess of $1 million per individual
for deduction under Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder. The Committee currently does not
anticipate that the compensation of any executive officer during 2000 will
exceed the limits on deductibility for 2000. In determining a policy for future
periods, the Committee would expect to consider a number of factors, including
the tax position of the Company, the materiality of amounts likely to be
involved and any potential ramifications of the loss of flexibility to respond
to unforeseeable changes in circumstances.
Members of the Compensation Committee:
E. William Barnett
John H. Moore
James R. Paul
17
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 3, 2000 by (i) each director
or nominee for director, (ii) each of the named executive officers, (iii) all
executive officers and directors of the Company as a group, and (iv) all those
known by the Company to be beneficial owners of more than five percent of the
Company's Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
----------------------------
Number Percentage
Beneficial Owner of Shares of Total
---------------- --------- ---------
<S> <C> <C>
S.A. Louis Dreyfus et Cie (2) 20,750,000 51.2%
Mark E. Monroe (3) (4) 166,246 *
Jeffrey A. Bonney (3) (4) 72,180 *
Richard E. Bross (3) (4) 94,002 *
Ronnie K. Irani (3) (4) 146,434 *
Kevin R. White (3) (4) 85,618 *
Simon B. Rich, Jr. (3) (4) 176,915 *
Mark E. Andrews, III (3) (4) (5) 120,398 *
E. William Barnett (3) (4) 11,076 *
Daniel R. Finn, Jr. (3) (4) 21,000 *
Peter G. Gerry (3) (4) 12,810 *
Gerard Louis-Dreyfus (3) (4) 24,000 *
John H. Moore (3) (4) 16,316 *
Nancy K. Quinn (3) (4) 7,000 *
James R. Paul (3) (4) 17,000 *
Ernest F. Steiner (3) (4) 28,076 *
All executive officers and directors 999,071 2.4%
as a group (15 persons) (6)
</TABLE>
__________________________
* Less than one percent.
(1) This table is based upon information supplied by officers, directors
and principal shareholders and applicable Schedules 13D or 13G filed
with the Securities and Exchange Commission. Unless otherwise indicated
in the footnotes to this table and subject to community property laws
where applicable, each of the shareholders
18
<PAGE>
named in this table has sole voting and investment power with respect to
the shares indicated as beneficially owned. The percentage of ownership
for each person is calculated in accordance with rules of the Securities
and Exchange Commission without regard to shares of Common Stock issuable
upon exercise of outstanding stock options, except that any shares a
person is deemed to own by having a right to acquire by exercise of an
option are considered outstanding solely for purposes of calculating such
person's percentage ownership.
(2) S.A. Louis Dreyfus et Cie, 87 Avenue de la Grande Armee, 75782 Paris,
France, shares voting and investment power over the shares indicated as
beneficially owned by it with its direct or indirect wholly-owned
subsidiaries Louis Dreyfus Holding Company Inc. and Louis Dreyfus
Commercial Activities, Inc. ("LDCA"), 10 Westport Road, Wilton,
Connecticut 06897-0810, and Louis Dreyfus Natural Gas Holdings Corp.
("LDNGHC") and L.D. Fashions Holdings Corp. ("LDFHC"), 3411 Silverside
Road, Suite 210E, Baynard Building, Wilmington, Delaware 19810-4808.
These shares are owned of record as follows: LDNGHC - 11,000,000 shares;
LDFHC - 9,000,000 shares; and LDCA - 750,000 shares. Of the 11,000,000
shares of Common Stock held by LDNGHC, 3,000,000 have been pledged to
certain banks to secure a loan made to S.A. Louis Dreyfus et Cie in the
ordinary course of its business. A default by S.A. Louis Dreyfus et Cie
under the terms of such arrangements could result in the sale of all or a
portion of the pledged shares. In addition, on January 25, 1999, a
judgement in the amount of $166,131,529 was rendered against LDNGHC and
other defendants in Texas state court proceedings in connection with
matters unrelated to the Company. LDNGHC has advised the Company that it
is vigorously contesting the judgment. LDNGHC has appealed the judgment
and taken actions to prevent any collection pending appeal. Pursuant to a
court order in this proceeding, LDNGHC has pledged 8,000,000 of its
11,000,000 shares, and has given a secondary lien on its remaining
3,000,000 shares, to the judgment creditor pending the outcome of its
appeal, which is not expected to be completed until after mid year 2000.
If the appeal is unsuccessful, it is possible that all or a portion of
the shares held by LDNGHC may be sold or otherwise disposed of in
connection with such proceedings. The sale of all or a portion of the
shares held by LDNGHC, whether in connection with the bank pledge or the
litigation, could result in a change in control of the Company.
(3) Includes shares that the named individuals have the right to acquire by
exercise of stock options that are currently exercisable as follows:
Monroe - 83,220; Bonney - 64,267; Bross - 60,450; Irani - 122,380; White
-75,194; Rich - 161,000; Andrews - 52,000; Barnett - 8,000; Finn- 14,000;
Gerry - 10,000; Louis-Dreyfus - 14,000; Moore - 10,000; Paul- 14,000;
Quinn - 6,000; and Steiner - 10,000.
(4) Includes shares of Common Stock held for the benefit of the named
individuals by (i) the Louis Dreyfus Natural Gas Corp. Deferred Stock
Award Trust or Louis Dreyfus Natural Gas Corp. Restricted Stock Trust in
the following amounts: Monroe - 25,190; Bonney - 1,805; Bross -17,257;
Irani - 17,934; and White - 6,805 and (ii) the Louis Dreyfus Natural Gas
Corp. Non-Employee Director Deferred Stock Compensation Award Trust in
the following amounts: Rich - 3,515; Andrews - 1,000; Barnett - 3,076;
Finn - 2,000; Gerry - 2,000; Louis-Dreyfus - 2,000; Moore - 3,076; Paul -
2,000; Quinn - 1,000; and Steiner - 3,076. Under the terms of the trust
agreements, the named individuals do not currently have the power to
dispose of such shares but have sole power to direct the voting of such
shares.
(5) Includes 6,574 shares held indirectly by Mr. Andrews' children and as to
which he disclaims beneficial ownership.
(6) Includes 704,511 shares that the directors and executive officers as a
group have a right to acquire by exercise of currently exercisable stock
options and 91,734 shares held for the benefit of certain executive
officers and directors by the Trusts described in footnote (4) above.
CERTAIN TRANSACTIONS
Prior to the completion of the Company's initial public offering in
November 1993, the Company was a wholly-owned subsidiary of S.A. Louis Dreyfus
et Cie. For purposes of the following discussion of certain transactions
involving the Company, unless the context requires
19
<PAGE>
otherwise, references to the "Company" refer to the Company and its subsidiaries
and predecessors and references to "S.A. Louis Dreyfus et Cie" refer to S.A.
Louis Dreyfus et Cie and its subsidiaries (other than the Company and its
subsidiaries and predecessors).
Pursuant to a Services Agreement between the Company and S.A. Louis
Dreyfus et Cie entered into in 1993, the Company has agreed to reimburse S.A.
Louis Dreyfus et Cie for a portion of the salaries of employees performing
services requested by the Company based on the amount of time expended ("Hourly
Charges"), overhead costs equal to 40% of Hourly Charges and all direct third
party costs incurred by S.A. Louis Dreyfus et Cie on behalf of the Company.
During 1999, the Company paid to S.A. Louis Dreyfus et Cie approximately
$500,000 under the Services Agreement primarily for allocated insurance premiums
and related insurance services provided by S.A. Louis Dreyfus et Cie.
In 1993, the Company entered into a fixed-price sales contract with
S.A. Louis Dreyfus et Cie hedging 33 Bcf of the Company's natural gas production
over a five-year period beginning in 1996 at a weighted-average fixed price of
$2.49 per Mcf.
The terms of the transactions described above between the Company and
S.A. Louis Dreyfus et Cie and its subsidiaries were not established on an
arms-length basis and involved conflicts of interest. Nonetheless, the Company
believes that such transactions with S.A. Louis Dreyfus et Cie were on terms at
least as favorable to the Company as could have been obtained from unaffiliated
third parties. It is possible that S.A. Louis Dreyfus et Cie and the Company may
enter into material intercompany transactions from time to time in the future,
and the Company intends that the terms of any future transactions and agreements
between the Company and S.A. Louis Dreyfus et Cie will be at least as favorable
to the Company as could be obtained from unaffiliated third parties.
Gerard Louis-Dreyfus, Simon B. Rich, Jr., Daniel R. Finn, Jr. and
Ernest F. Steiner, all directors of the Company, are also executive officers
and/or directors of S.A. Louis Dreyfus et Cie or various of its subsidiaries.
See "Election of Directors."
During 1998, the Company loaned $90,000 to Kevin R. White, Executive
Vice President - Corporate Development and Strategic Planning of the Company.
The loan was unsecured and bore interest at the rate of 6% per annum. The
highest principal balance of the loan during 1999 was $90,000 and the
outstanding principal balance of the loan at December 31, 1999 was $55,000. The
loan was repaid in full subsequent to December 31, 1999.
COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS
Section 16(a) of the Securities and Exchange Act of 1934 requires
directors and executive officers of the Company and persons who beneficially own
more than 10% of the Company's Common Stock to file reports of ownership and
changes in ownership of the Company's Common Stock with the Securities and
Exchange Commission. The Company is required to disclose delinquent filings of
reports by such persons.
Based on a review of the copies of such reports and amendments thereto
received by the Company, or written representations that no filings were
required, the Company believes that all
20
<PAGE>
Section 16(a) filing requirements applicable to its executive officers,
directors and 10% shareholders were met during 1999, except as follows. Mark E.
Andrews, III was late in filing one report with respect to one transaction
during 1999.
VOTING
Directors will be elected by a plurality of the votes of the shares
present in person or represented by proxy at the Annual Meeting. The affirmative
vote of the holders of a majority of the shares of Common Stock that are
represented in person or by proxy at the Annual Meeting is required to approve
the 2000 Employee Stock Purchase Plan and to ratify the selection of Ernst &
Young LLP as independent auditors of the Company for the year ending December
31, 2000. All other matters properly brought before the Annual Meeting will be
decided by a majority of the votes cast on the matter, unless otherwise required
by law.
Shares represented by proxies that are marked "withhold authority" with
respect to the election of any one or more nominees for election as directors
and proxies that are marked "abstain" on the proposals to approve the 2000
Employee Stock Purchase Plan or to ratify the selection of Ernst & Young LLP as
independent auditors will be counted for the purpose of determining the number
of shares represented by proxy at the meeting. As a result, proxies marked
"abstain" with regard to the approval of the 2000 Employee Stock Purchase Plan
or the ratification of the selection of Ernst & Young LLP as independent
auditors will have the same effect as if the shares represented thereby were
voted against the proposal. However, because directors are elected by a
plurality rather than a majority of the shares present in person or represented
by proxy at the Annual Meeting, proxies marked "withhold authority" with respect
to any one or more nominee will not affect the outcome of the nominee's election
unless the nominee receives no affirmative votes or unless other candidates are
nominated for election as directors.
Shares represented by limited proxies will be treated as represented at
the meeting only as to such matter or matters for which authority is granted in
the limited proxy. Shares represented by proxies returned by brokers where the
brokers' discretionary authority is limited by stock exchange rules will be
treated as represented at the Annual Meeting only as to such matter or matters
voted on in the proxies.
PROPOSALS OF SHAREHOLDERS
The Board of Directors will consider proposals of shareholders intended
to be presented for action at annual meetings of shareholders. According to the
rules of the Securities and Exchange Commission, such proposals shall be
included in the Company's Proxy Statement if they are received in a timely
manner and if certain other requirements are met. For a shareholder proposal to
be included in the Company's Proxy Statement relating to the 2001 Annual Meeting
of Shareholders, a written proposal complying with the requirements established
by the Securities and Exchange Commission must be received no later than
December 16, 2000. In addition, the proxy solicited by the Board of Directors
for the 2001 Annual Meeting will confer discretionary authority to vote on any
proposal presented at the 2001 Annual Meeting, unless the Company is provided
with notice of
21
<PAGE>
such proposal no later than March 2, 2001. All shareholder proposals should be
delivered to the attention of the Secretary of the Company, at the Company's
principal executive offices, 14000 Quail Springs Parkway, Suite 600, Oklahoma
City, Oklahoma 73134.
OTHER MATTERS
Management does not know of any matters to be presented for action at
the Annual Meeting other than those listed in the Notice of Meeting and referred
to herein. If any other matters properly come before the Annual Meeting, it is
intended that the proxy solicited hereby will be voted in accordance with the
recommendations of the Board of Directors.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the year ended December
31, 1999, including audited financial statements, is enclosed. No part of the
Annual Report to Shareholders is incorporated in this Proxy Statement or is
deemed to be a part of the material for the solicitation of proxies.
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 1999 is available to
shareholders without charge upon written request to the Secretary of the
Company, 14000 Quail Springs Parkway, Suite 600, Oklahoma City, Oklahoma 73134.
22
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
LOUIS DREYFUS NATURAL GAS CORP.
14000 Quail Springs Parkway
Suite 600
Oklahoma City, Oklahoma 73134
The undersigned hereby appoints Kevin R. White and David B. Oshel as
proxies (the "Proxies"), each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the other
side, all of the shares of Common Stock of Louis Dreyfus Natural Gas Corp. held
of record by the undersigned on the record date at the Annual Meeting of
Shareholders to be held on May 16, 2000 or any reconvention thereof.
(Continued, and to be marked, dated, and signed, on the other side)
Please mark
your votes as
WITHHELD indicated in this
FOR FOR ALL example
Item 1 - ELECTION OF DIRECTORS [_] [_] [X]
Nominees:
Mark E. Andrews, III Mark E. Monroe
E. William Barnett John H. Moore
Richard E. Bross James R. Paul
Daniel R. Finn, Jr. Nancy K. Quinn
Peter G. Gerry Simon B. Rich, Jr.
Gerard Louis-Dreyfus Ernest F. Steiner
WITHHELD FOR (Write nominee name(s) in the space provided): ___________
Item 2 - APPROVAL OF 2000 EMPLOYEE FOR AGAINST ABSTAIN
STOCK PURCHASE PLAN
[_] [_] [_]
Item 3 - RATIFICATION OF SELECTION OF FOR AGAINST ABSTAIN
INDEPENDENT ACCOUNTANTS
[_] [_] [_]
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting. If any other business is presented at
the Annual Meeting, this Proxy shall be voted in accordance with the
recommendations of the Board. As to Items 1, 2 and 3, this Proxy will be voted
as directed, but if no directions are indicated, it will be voted FOR the
nominees listed in Item 1 and FOR Items 2 and 3.
Signature(s) _________________________________________ Date ____________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, administrator, trustee or guardian, please give full title
as such.
